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6th May 2022 > > Ethereum Name Service - the coin.


ENS coin is the governance token for Ethereum Name Service.

Market Snap (at time of writing)

Market Wrap

Put buyers are likely to be pleased with themselves for today’s option expiries with any number less than $40k placing that cohort in the money. This might possibly explain the significant overnight move in the perpetual futures funding rates – put owners leveraging their in-the-money options to encourage further downward pressure on the price of BTC before this afternoon.

I suspect the funding rate will be back to neutral by this evening.

Wall Street down and up 1,000 points on Tuesday, and then up and down 1,000 points Wednesday and Thursday killing the leveraged crowd. There is a whole lot of value destruction in those moves, which is of course why they happen. Financial markets will always cause the maximum amount of pain for the maximum amount of people possible, in the nicest possible way.

Constructive destruction I call it. We could do with more of that.

Curious Cryptos’ Commentary – ENS (Ethereum Name Service) coin

The Ethereum Name Service organisation was spun out of the Ethereum Foundation in 2018. It isn’t a company as such – it has a rather amorphous organisational structure, describing itself as “an open public utility that belongs to the company”, whatever that may mean.

The objective of ENS the organisation – as we saw in yesterday’s CCC – is to make the sharing of public keys much more accessible by referencing those keys in human-readable format (see postscript below). You can for instance now send ETH by using the address marktimmis.eth which is a whole lot simpler to remember and understand than the traditional public key format.

Supported by the Ethereum Foundation, Binance X, Chainlink, Ethereum Classic Labs, and Protocol Labs, this highly sensible project has a strong claim to become a core element of Web 3.0 in my opinion, though of course that statement does not constitute financial advice. I offer up my view purely for discussion and educational purposes.

Here is a short technical description lifted from CoinMarketCap:

“The registry, a smart contract that stores all names, subdomains and who owns them.

“The registrars, a smart contract that owns a domain and releases subdomains to users who meet the smart contract criteria; for instance, alice.eth can claim a subdomain for pay.alice.eth and can configure it as she wishes.

“The resolvers, a smart contract that stores and serves records upon request. They are responsible for the actual process of translating names into addresses.”

In November 2021 all users were airdropped ENS coin, an ERC20 token naturally.

ENS is a governance coin as ENS the organisation transitions to becoming a DAO (decentralised autonomous organisation). Fees that accrue from selling .eth domain names go to the ENS treasury which is currently controlled by a 4-7 multi-sig wallet out of the nine people who are employed by ENS.

Clearly there is some way to go before ENS loses its centralisation but that is a criticism that can be levied right now at a lot of decentralised finance (DeFi) and Web 3.0 projects.

A key question relates to the adoption and credibility of .eth as a product.

On May 1st 2022 the total number of domain registrations exceeded 1mm, which is a miniscule figure when compared to the potential number of users. That could of course be interpreted in two ways – either we are just at the start of dramatic growth in user numbers, or the user base is simply not there. That’s a judgement call, perhaps illuminated by this graph:

Within these figures is a dramatic increase in the registration of three and four letter domain names. Five letters and above cost around $6 per year, four letters cost $160 and three letters cost $640, for the simple reason that demand is likely to be higher for catchier names.

There is speculation that it is owners of NFTs who are buying up the shorter names for marketing purposes, but that is purely speculation for now.

These .eth domain names are themselves NFTs and can be traded like any other NFT. OpenSea is always a good starting place:

Strangely marktimmis.eth already has two likes, neither from me.

The revenue stream accruing to ENS the organisation from selling domain names has been $42mm in the last 12 months.

The market cap is $460mm as of today suggesting that investors have high hopes for future revenue growth, a phenomenon which is hardly unique in the tech world. Clearly as a private organisation there is zero visibility on costs or any impartial assessment of its future financial prospects. Again, that is hardly unique in the tech world.

But just for fun, and for those who are interested, here is ENS price action since that airdrop:

Having bought marktimmis.eth yesterday, I feel duty bound to check out its functionality with an initial investment in ENS from a centralised exchange (probably Coinbase as it has a ENSEUR market) followed by a transfer using my .eth domain name.

Ooh life just doesn’t get much more exciting than that. I will let you know how I get on. I bet you cannot wait.

P.S. The ETH wallet address I quoted yesterday was incorrect, it belongs to my daughter Robin not me.

Which just goes to show the value of having human-readable public keys.

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